Correlation Between Elcom Technology and Ben Thanh
Can any of the company-specific risk be diversified away by investing in both Elcom Technology and Ben Thanh at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Elcom Technology and Ben Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elcom Technology Communications and Ben Thanh Rubber, you can compare the effects of market volatilities on Elcom Technology and Ben Thanh and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Elcom Technology with a short position of Ben Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and Ben Thanh.
Diversification Opportunities for Elcom Technology and Ben Thanh
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elcom and Ben is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and Ben Thanh Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ben Thanh Rubber and Elcom Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Elcom Technology Communications are associated (or correlated) with Ben Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ben Thanh Rubber has no effect on the direction of Elcom Technology i.e., Elcom Technology and Ben Thanh go up and down completely randomly.
Pair Corralation between Elcom Technology and Ben Thanh
Assuming the 90 days trading horizon Elcom Technology Communications is expected to generate 3.79 times more return on investment than Ben Thanh. However, Elcom Technology is 3.79 times more volatile than Ben Thanh Rubber. It trades about 0.37 of its potential returns per unit of risk. Ben Thanh Rubber is currently generating about -0.19 per unit of risk. If you would invest 2,520,000 in Elcom Technology Communications on September 24, 2024 and sell it today you would earn a total of 280,000 from holding Elcom Technology Communications or generate 11.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Elcom Technology Communication vs. Ben Thanh Rubber
Performance |
Timeline |
Elcom Technology Com |
Ben Thanh Rubber |
Elcom Technology and Ben Thanh Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Elcom Technology and Ben Thanh
The main advantage of trading using opposite Elcom Technology and Ben Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom Technology position performs unexpectedly, Ben Thanh can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ben Thanh will offset losses from the drop in Ben Thanh's long position.Elcom Technology vs. FIT INVEST JSC | Elcom Technology vs. Damsan JSC | Elcom Technology vs. An Phat Plastic | Elcom Technology vs. Alphanam ME |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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